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Report: Global E-Commerce To Hit $550B in 2001

By Michael Mahoney
Mar 21, 2001 5:31 PM PT

Despite mounting evidence that the global economy is slowing, total worldwide retail e-commerce is expected to reach US$550 billion in 2001, a 92 percent increase from 2000, according to a report released Tuesday by eMarketer.

Report: Global E-Commerce To Hit $550B in 2001

"The Internet is alive and well and very resilient," eMarketer chief executive officer Geoff Ramsey told the E-Commerce Times. "This is not a fad or novelty. In terms of the growth of e-commerce in both the U.S. and worldwide, essentially everything is on track despite what we're seeing with the economy."

The report, which aggregated data from more than 100 research organizations, found that global e-commerce revenues will nearly double from the $286 billion generated in 2000.

"Total retail sales could be flat but that will only somewhat hurt e-commerce sales because people are still migrating towards the Internet as a new channel," Ramsey said. "Online sales will continue to grow because it's still a new way for many people to buy -- it's displacing or cannibalizing other sales."

Shifting Tides

The eMarketer report also said that despite the increase in overall e-commerce revenues, the dot-com landscape will continue to redraw its borders throughout most of 2001 and early 2002, as hundreds of e-businesses are set to run out of cash -- and customers.

"Well-established offline retail companies will muscle in on the dot-com's diminishing territory," the report said. "The saving grace of B2C e-commerce will be the click-and-mortar company that will take the high road to Web prosperity."

Europe Gaining

According to the report, North America currently garners almost 80 percent of global B2C e-commerce sales.

However, Europe's share is expected to grow dramatically in the next few years, as the region adopts technology and begins to embrace online shopping. By 2004, North America's share of the e-commerce market will drop to around 56 percent, e Marketer said.

Shopping Pleasure

Ramsey said that cultural differences may be one of the biggest reasons for the discrepancy between U.S. and European e-commerce.

In the U.S., people tend to dislike the hassles of shopping, whereas in Europe and Asia shopping is often considered an enjoyable social event.

"In the U.S. you can expect by year 2004-05 [that] Internet buying penetration will approach the same level as buying by catalog or mail order of around 50 percent, but in those regions where catalogs haven't taken off as much, it may be an indicator that there may be a wall coming up for some of those regions," said Ramsey.

Stumbling Blocks

According to eMarketer, shipping costs remain a major barrier to the growth of e-commerce across all regions and cultures.

Other barriers include the need for e-commerce pure-play companies to invest in real-world infrastructure, such as warehouses and call centers.

"One of main obstacles to e-commerce growth is on the vendor side," said Ramsey. "At some point your e-business turns into a traditional business and you have to start investing in infrastructure, warehouses, logistics, etc., to really make your business run."

Travel Rules

The eMarketer report predicts that the online travel segment will continue as the top e-commerce category through 2004. Travel, computer and gift/flower segments will be the top three categories for 2001, the report said.

"Travel lends itself to the Internet," Ramsey said. "The Internet does best with products that can be sold virtually like e-tickets. You don't have to send anything in the mail which helps the business economics. The Internet is primarily an information medium, and there's a huge amount of information associated with making travel plans," said Ramsey.

The research firm also predicts that the food/beverages/grocery and apparel/footwear segments will move up the top 10 category ladder in coming years.

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